Commonly owned application Ser. No. 968,457 filed Dec. 11, 1978 and entitled NOVELTY YARN AND METHOD discloses a unique and appealing novelty yarn which is characterized by having effect loops of random size distributed at random locations along the yarn. The method disclosed in that application provides for producing such a yarn on a conventional yarn processing machine such as a spinning frame to thereby eliminate the need for using expensive and specialized machinery such as novelty twisters. The method involves advancing a foundation strand along a predetermined path of travel through a twisting zone and imparting twist to the foundation strand while directing an effect strand onto the foundation strand in the twisting zone and causing the effect strand to move in an oscillating manner along the foundation strand and to become wound about the foundation strand while at random intervals forming outwardly projecting loops of random size along the foundation strand. A binder strand is directed onto the foundation and effect strands while still in the twisting zone and the binder strand is caused to become wound about the yarn so as to bind the effect strand to the underlying foundation strand.